DALLAS – In one of its first downgrades since hurricane Harvey struck the coast of Texas, Moody's Investors Service lowered to A2 from A1 the rating on the city of Port Arthur’s general obligation limited tax bonds.
The downgrade on $55.3 million of outstanding debt reflects the industrial city’s “weak liquidity position that is exposed to additional financial obligations from the recent hurricane damage, that are above and beyond the city's regular scope of operations,” analyst Adebola Kushimo wrote.
The A2 rating indicates the importance of the city as home to several major petrochemical companies, supporting a substantially large economy and tax base, Kushimo noted.
“Despite hurricane-related impact on a significant number of structures within the city, the companies' longer term commitment to industrial projects should support stable economic performance,” she said.
Two months after record rainfall and high winds blasted the Texas coast from Corpus Christi to the Louisiana border, analysts are sorting out the degree of damage to tax bases and lost revenue. Port Arthur’s neighboring city of Beaumont had its water system shut down briefly by storm damage.
S&P Global Ratings has negative outlooks on three cities and five municipal utility districts, so far.
The Jefferson County Central Appraisal District, which includes Beaumont and Port Arthur, notified property owners of its plans to account for damages as on Jan. 1, 2018. “Any damages that remain as of that date will affect your property value for the entire year of 2018,” the advisory said.
According to the real estate site Zillow, the pre-hurricane median list price per square foot in Port Arthur was $60, which was lower than the Beaumont Metro average of $89. The median price of homes in Port Arthur was $89,900, according to the site.
City officials announced recently that mobile homes from the Federal Emergency Management Agency have begun arriving ahead of schedule.
“It has left people homeless,” State Sen. Jane Nelson, R-Flower Mound, told a state Senate Finance Committee hearing on Hurricane Harvey recovery efforts Tuesday. “It has caused unprecedented damage and it will have lasting effects on our economy and our budget.”
Commissioner John Sharp with the Governor’s Commission to Rebuild Texas says an issue that is often seen during the rebuilding and response phases are how people may not know how to fill out FEMA forms.
With a population of about 54,000, Port Arthur boasts a tax base of more than $10 billion, including the Saudi Aramco-Motiva refinery, the largest in the United States. Under new laws allowing energy exports from the U.S., Port Arthur has seen about $2 billion of investment in liquefied natural gas terminals.